Fair selection for redundancy

Dismissal due to redundancy  

In a recent Tribunal case Mr. V. Goguelin v. Stuart Banks (Carpenters & Builders) Limited (May 2006 case number 2502037/06), the Tribunal set out its expectations in regard to a dismissal by reason relating to the redundancy of an employee, in determining whether that dismissal was fair or unfair.  

It is important to understand the background to the case and the actions taken by the parties in order to deal fairly with similar situations in the future.  

Background

The employee was a highly skilled and experienced carpenter and had worked for the employer just short of 3 years. He was one of 5 carpenters, including an improver, but due to his experience he was the highest paid and, therefore, had the highest charge-out rate to customers. His employer regarded him as the "senior carpenter" but this title was disputed by the employee, who stated that he was willing to turn his hand to any task on a site.  

The employee had recently worked on a long-running renovation of a property. Problems arose with the windows which had been incorrectly built and fitted by third parties. It was suggested that the Company (Stuart Banks Ltd.) undertook remedial work but the employee made it clear he did not want to do so as it would compromise his reputation as a craftsmen – he believed the third parties responsible for their installation should resolve problems. Mr. Banks accepted this situation and for some time found other work for the employee commensurate with his skills. However, work began to become scarce for a carpenter as experienced as the employee was, and his employer expressed concern at least three times to the employee, especially in view of his refusal to return to the renovation project and the problem windows. A five-week roofing job was offered to the employer and he took it in order to provide work for the employee, allowing the employer more time to find other suitable alternative work for him. Inclement weather forced the employee to return to the renovation project. The employee made it clear that he did not want to return to the project and his employer replied "What else am I going to do with you?" The employee stated at the Tribunal that he meant he did not want to return to work on the windows but he would have done any other carpentry work required. The employer maintained that the employee was too highly skilled and expensive to undertake such work.  

Shortly after, the employer decided that he would have to "let the employee go" as there was simply not enough specialist carpentry work available to the Company at that time. The employee was given notice after a short discussion at which the employer told him that after the roofing job there was no more work available for him. The matter was not discussed again while the employee worked his notice.  

The employer told the Tribunal that since the employee had left, no suitable work had become available to the business and he had not been replaced. Indeed the next most senior carpenter resigned shortly after the employee left and he had not been replaced either.

Was the employee unfairly dismissed?  

The Tribunal noted that Article 64 requires an employer to show the reason for the dismissal when the fairness or unfairness of that dismissal is being considered. The fact of an employee’s redundancy is considered a potentially fair reason for dismissal.  

Redundancy, is defined by the Law in Article 2, as existing where, ’the dismissal is wholly or mainly attributable to ... the fact that the requirements of that business ... for employees to carry out work of a particular kind ... have ceased or diminished or are expected to cease or diminish’.  

The Tribunal heard evidence from the employer that he had no work on the books of the Company which was commensurate with the skills and experience of the employee or which they could charge him out to customers to perform at his higher rate.  

Accordingly the Tribunal found that the reason for the employee’s dismissal was that he was redundant.

Was the dismissal fair ?  

Article 64(4) of the Law requires the Tribunal to assess whether this dismissal was fair or not, and this shall be determined, bearing in mind the reason for the dismissal, by;  

a)       whether in all the circumstances including the size and administrative resources of the Company’s business, the Company acted reasonably or not in treating the lack of specialist work as a sufficient reason for dismissing the employee, and

b)       by considering equity and the substantial merits of the case.

The Tribunal stated it was not concerned with the reason for deciding to make the employee redundant, that is a purely business decision for the directors of the Company, but it is interested in the fairness of the decision to select him for redundancy, using the criteria set out in article 64(4) above. The Tribunal looked to assess whether the Company acted reasonably in selecting that employee for redundancy.  

The Tribunal heard that the employee was selected for redundancy because there was no upcoming work requiring his skills and experience as a ’senior carpenter’. The employee totally disputed this title and said in evidence that he simply did the work required of him; as he was experienced he did the most difficult jobs but he was always willing to do the straightforward work too, including non carpentry work if necessary. He insisted that he only refused to undertake the remedial work on the windows on the renovation job, not the other work available on that site. This is disputed by the parties because the employer said the employee was simply too expensive to use for mundane work.  

The employee insisted that other more junior carpenters could have been dismissed by the Company before him certainly as they started after him. The employer gave evidence that their skills, experience and charge out rate were exactly right for what the Company needed at that time and it fitted the Company’s needs to retain those employees and to let the more highly skilled and expensive employee go. The Tribunal was also mindful of the evidence heard that no carpentry work requiring the employee’s skills and experience had come into the business since the employee left.  

The employer did warn the employee that the specialist carpentry work he undertook was drying up. The Tribunal heard that he mentioned this about six times, but each time in a fairly vague, roundabout way. The employer did not warn the employee that these circumstances could lead to him being made redundant. The employee gave evidence that the employer always supplied work for him and he was never concerned that the work might cease to exist. The Tribunal noted that just as the employer was getting seriously concerned about the next job for the employee (and had warned him of this situation), the roofing job arrived. It is no wonder that the employee never gave future work in the Company a second thought.  

However if the employer had consulted the employee early on about his possible redundancy and the reasons for it, the employee would have had the opportunity to inform himself of the relevant facts, consider alternatives solutions and if necessary discuss alternative employment in the Company or elsewhere.  

On questioning from the Tribunal, the employer admitted that he had not expressly warned the employee of his dismissal or suggested to him that he take a pay cut in order that the Company could keep him on and charge him out to customers at a lower rate. He did not discuss redundancy or alternatives to redundancy with the employee or indeed consider any other option than to let him go, when deciding what to do.

DECISION  

When dealing with the employee the Company failed to follow four ordinary principles of fairness which should always be considered in situations of redundancy:  

The Tribunal stated:

• The employer should have been explicit in his warnings of the work drying up that such situation would affect the employee directly and could result in his redundancy.
• The reasons for the employee’s selection for redundancy should have been discussed between the two of them and the employee given a chance to respond.
• Alternatives to the employee’s dismissal should have been looked at by the Company and in consultation with the employee, such as a cut in wages.
• These consultations may have resulted in the employee keeping his job, even if it was at the expense of another employee who had been there less time than him. It was his right as the employee of longer standing, to remain in work with the Company if he wished to do so. The Tribunal would have anticipated a number of these meetings to have taken place and minuted so each party had time to reflect on the matters discussed before the next meeting and a decision given. Such meetings allow the employee to be warned, informed, work with the employer on the issues and, if necessary, move seamlessly into new employment.  

In the absence of these conditions it is not surprising that the employee thought he had been sacked, he had no reason to know why he had been chosen to lose his particular job in the Company.  

The Tribunal found that the Company did not act fairly in dismissing the employee and accordingly that the dismissal was unfair. 

JACS November 2006